-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, THjDHV7A1MYTp9bFkt9KbtWnhcJBJLGI0yd/Ht3U50O3Xb9knCrb64iYrlKA1h/O QapUnvvlkjsVLPLX6T4LgA== 0000794619-99-000028.txt : 19991213 0000794619-99-000028.hdr.sgml : 19991213 ACCESSION NUMBER: 0000794619-99-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991031 FILED AS OF DATE: 19991210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN WOODMARK CORP CENTRAL INDEX KEY: 0000794619 STANDARD INDUSTRIAL CLASSIFICATION: MILLWOOD, VENEER, PLYWOOD & STRUCTURAL WOOD MEMBERS [2430] IRS NUMBER: 541138147 STATE OF INCORPORATION: VA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14798 FILM NUMBER: 99772586 BUSINESS ADDRESS: STREET 1: 3102 SHAWNEE DR CITY: WINCHESTER STATE: VA ZIP: 22601 BUSINESS PHONE: 5406659100 MAIL ADDRESS: STREET 1: PO BOX 1980 CITY: WINCHESTER STATE: VA ZIP: 22604-8090 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission file number 0-14798 ------- American Woodmark Corporation ----------------------------- (Exact name of registrant as specified in its charter) Virginia 54-1138147 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3102 Shawnee Drive, Winchester, Virginia 22601 - ----------------------------------------- --------- (Address of principal executive offices) (Zip Code) (540) 665-9100 --------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - --------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value 7,977,132 shares outstanding - -------------------------- ---------------------------- Class as of December 9, 1999 AMERICAN WOODMARK CORPORATION FORM 10-Q INDEX PAGE PART I. FINANCIAL INFORMATION NUMBER - ------------------------------ ------ Item 1. Financial Statements Consolidated Balance Sheets--October 31, 1999 and April 30, 1999 3 Consolidated Statements of Income--Three months ended October 31, 1999 and 1998; Six months ended October 31, 1999 and 1998 4 Consolidated Statements of Cash Flows--Six months Ended October 31, 1999 and 1998 5 Notes to Consolidated Financial Statements-- October 31, 1999 6-9 Item 2. Management's Discussion and Analysis 10-16 Item 3. Quantitative and Qualitative Disclosure of Market Risk 16 PART II. OTHER INFORMATION - -------------------------- Item 6. Reports on Form 8-K 16 SIGNATURE 17 - --------- 2 PART I. FINANCIAL INFORMATION AMERICAN WOODMARK CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except share data) October 31 April 30 1999 1999 ----------- --------- ASSETS (Unaudited) (Audited) Current Assets Cash and cash equivalents $ 3,567 $14,165 Customer receivables 36,714 38,925 Inventories 23,642 18,008 Prepaid expenses and other 1,993 1,487 Deferred income taxes 3,062 1,936 ----------- --------- Total Current Assets 68,978 74,521 Property, Plant and Equipment 67,200 53,739 Deferred Costs and Other Assets 13,388 11,046 Intangible Pension Assets 1,303 1,303 ----------- --------- $150,869 $140,609 =========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Loans payable $ 2,450 $ 0 Accounts payable 19,168 18,919 Accrued compensation and related expenses 15,370 17,183 Current maturities of long-term debt 1,986 1,974 Other accrued expenses 7,332 6,959 ----------- --------- Total Current Liabilities 46,306 45,035 Long-Term Debt, less current maturities 10,550 11,435 Deferred Income Taxes 4,718 3,373 Long-Term Pension Liabilities 2,429 2,429 Commitments and Contingencies -- -- Stockholders' Equity Preferred Stock, $1.00 par value; 2,000,000 shares authorized, none issued Common Stock, no par value; 20,000,000 shares authorized; issued and outstanding 7,950,849 shares at October 31, 1999; 7,800,886 shares at April 30, 1999 22,104 21,575 Retained earnings 64,762 56,762 ----------- --------- Total Stockholders' Equity 86,866 78,337 ----------- --------- $150,869 $140,609 =========== ========= See notes to consolidated financial statements 3 AMERICAN WOODMARK CORPORATION CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share data) (Unaudited) Three Months Ended Six Months Ended October 31 October 31 ------------------ ---------------- 1999 1998 1999 1998 ------- ------- ------- ------- Net sales $ 99,259 $ 79,401 $193,436 $152,074 Cost of sales and distribution 73,750 56,750 141,854 107,517 ------- ------- ------- ------- Gross Profit 25,509 22,651 51,582 44,557 Selling and marketing expenses 14,982 12,232 29,206 22,594 General and administrative expenses 4,059 2,783 8,255 7,379 ------- ------- ------- ------- Operating Income 6,468 7,636 14,121 14,584 Interest expense 23 20 152 190 Other income (282) (233) (342) (484) ------- ------- ------- ------- Income Before Income Taxes 6,727 7,849 14,311 14,878 Provision for income taxes 2,627 3,041 5,597 5,829 ------- ------- ------- ------- Net Income $ 4,100 $ 4,808 $ 8,714 $ 9,049 ======= ======= ======= ======= Earnings Per Share Weighted average shares outstanding Basic 7,937,869 7,827,961 7,929,092 7,818,429 Diluted 8,083,737 8,000,211 8,099,015 7,992,216 Net income per share Basic $0.52 $0.62 $1.10 $1.16 Diluted $0.51 $0.60 $1.08 $1.13 ======= ======= ======= ======= See notes to consolidated financial statements 4 AMERICAN WOODMARK CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Six Months Ended October 31 ---------------- 1999 1998 Operating Activities ------- ------ Net income $ 8,714 $9,049 Adjustments to reconcile net income to net cash provided by operating activities: Provision for depreciation and amortization 6,650 4,170 Net gain on disposal of property, plant and equipment (1) (13) Deferred income taxes 219 (149) Other non-cash items 498 489 Changes in operating assets and liabilities: Customer receivables 1,829 (4,698) Inventories (5,952) (2,350) Other assets (5,915) (4,750) Accounts payable 249 4,731 Accrued compensation and related expenses (1,813) 308 Other 21 65 ------- ------ Net Cash Provided by Operating Activities 4,499 6,852 ------- ------ Investing Activities Payments to acquire property, plant and equipment (16,674) (11,256) Proceeds from sales of property, plant and equipment 10 15 ------- ------ Net Cash Used by Investing Activities (16,664) (11,241) ------- ------ Financing Activities Payments of long-term debt (670) (438) Proceeds from the issuance of Common Stock 501 583 Payment of dividends (714) (547) Net Increase in Short-term Borrowings 2,450 0 Increase in Long-term Borrowings 0 250 ------- ------ Net Cash Provided (Used) by Financing Activities 1,567 (152) ------- ------ Decrease In Cash And Cash Equivalents (10,598) (4,541) Cash And Cash Equivalents, Beginning Of Period 14,165 23,925 ------- ------ Cash And Cash Equivalents, End Of Period $ 3,567 $19,384 ======= ====== See notes to consolidated financial statements 5 AMERICAN WOODMARK CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A--BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended October 31, 1999 are not necessarily indicative of the results that may be expected for the year ended April 30, 2000. The unaudited financial statements should be read in conjunction with the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended April 30, 1999. NOTE B--NEW ACCOUNTING PRONOUNCEMENTS As of May 1, 1999 the Company adopted the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants' Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." The SOP requires qualifying computer software costs incurred in connection with obtaining or developing software for internal use to be capitalized. In prior years, the Company capitalized costs of purchased software and expensed internal costs of developing software. The effect of adopting this SOP was not material to the results of the three or six month periods, and is not expected to be material for the full year. 6 NOTE C--EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended Six Months Ended October 31 October 31 ------------------ ---------------- 1999 1998 1999 1998 -------- ------- ------- ------ Numerator: Net income used for both basic and dilutive earnings per share $4,100 $4,808 $8,714 $9,049 Denominator: Denominator for basic earnings per share - weighted-average shares 7,937,869 7,827,961 7,929,092 7,818,429 Effect of dilutive securities: Employee Stock Options 145,868 172,250 169,923 173,787 ------- ------- ------- ------- Denominator for diluted earnings per share - adjusted weighted- average shares and assumed conversions 8,083,737 8,000,211 8,099,015 7,992,216 ========= ========= ========= ========= Basic earnings per share $ 0.52 $ 0.62 $ 1.10 $ 1.16 ==== ==== ==== ==== Diluted earnings per share $ 0.51 $ 0.60 $ 1.08 $ 1.13 ==== ==== ==== ==== 7 NOTE D--CUSTOMER RECEIVABLES The components of customer receivables were: October 31 April 30 1999 1999 (in thousands) ---------- --------- Gross customer receivables $39,658 $41,488 Less: Allowance for doubtful accounts (694) (422) Allowance for returns and discounts (2,250) (2,141) ---------- --------- Net customer receivables $36,714 $38,925 ========== ========= NOTE E--INVENTORIES The components of inventories were: October 31 April 30 1999 1999 (in thousands) ---------- --------- Raw materials $11,831 $ 9,433 Work-in-process 17,133 14,409 Finished goods 1,619 1,069 ---------- --------- Total FIFO inventories $30,583 $24,911 Reserve to adjust inventories to LIFO value (6,941) (6,903) ---------- --------- Total LIFO inventories $23,642 $18,008 ========== ========= Inventories determined using the LIFO inventory method were $22,702,000 at October 31, 1999 and $17,232,000 at April 30, 1999. Inventories determined using the FIFO inventory method were $940,000 at October 31, 1999 and $776,000 at the end of 1999. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management's estimates of expected year-end inventory levels and costs. Since they are subject to many forces beyond management's control, interim results are subject to the final year-end LIFO inventory valuation. NOTE F--CASH FLOW Supplemental disclosures of cash flow information: Six Months Ended October 31 ------------------ (in thousands) 1999 1998 ------ ------ Cash paid during the period for: Interest $ 302 $ 313 Income taxes $ 6,231 $ 6,278 8 NOTE G--OTHER INFORMATION The Company is involved in various suits and claims in the normal course of business. Included therein are claims against the Company pending before the Equal Employment Opportunity Commission. Although management believes that such claims are without merit and intends to vigorously contest them, the ultimate outcome of these matters cannot be determined at this time. In the opinion of management, after consultation with counsel, the ultimate liabilities and losses, if any, that may result from suits and claims involving the Company will not have a material adverse effect on the Company's results of operations or financial position. The Company is voluntarily participating with a group of companies which is cleaning up a waste facility site at the direction of a state environmental authority. The Company records liabilities for all probable and reasonably estimable loss contingencies on an undiscounted basis. For loss contingencies related to environmental matters, liabilities are based on the Company's proportional share of the contamination obligation of a site since management believes it probable that the other parties, which are financially solvent, will fulfill their proportional contamination obligations. There are no probable insurance or other indemnification receivables recorded. The Company has accrued for all known environmental remediation costs which are probable and can be reasonably estimated, and such amounts are not material. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS SIX MONTHS ENDED OCTOBER 31, 1999 AND 1998 RESULTS OF OPERATIONS - --------------------- Net sales for the second quarter of fiscal 2000 were $99.3 million, an increase of 25.0% over the second quarter of fiscal 1999. Net sales of $193.4 million for the six-month period ended October 31, 1999 were 27.2% higher than the same period of the prior year. Improved sales were reported across all channels of distribution as a result of new products introduced over the past year, a shift in mix to higher-end products, new store openings in the home center channel and overall market share gains. Current year average unit prices increased over prior year due to a general price increase implemented during the third quarter of the prior fiscal year and improvement in both channel and product mix. In fiscal 2000, second quarter gross margin was 25.7%, down from the fiscal 1999 second quarter gross margin of 28.5%. For the first six months of fiscal 2000, gross margin was 26.7%, down from the previous year six month gross margin of 29.3%. Both decreases were due to the combination of higher material, labor, overhead and distribution costs. Higher material costs were primarily the result of capacity limitations that required the outsourcing of certain component parts. The Company continued its aggressive capital expenditure program that began in the fourth quarter of fiscal 1998 to increase overall production capacity and relieve specific constraints in component production. While the Company is aggressively adding capacity, growth in demand for the Company's products continues to outpace the rate of capacity expansion. The Company experienced higher labor costs due to the short-term impact of new and inexperienced production employees hired to support the Company's growth. Higher overhead costs were the result of start-up expenses incurred at new facilities constructed to support the increased demand for the Company's products. Higher distribution costs were the result of increases in standard freight rates from third party carriers. Selling and marketing expenses increased $2.8 million for the second quarter of fiscal 2000 and $6.6 million for the first six months compared to the prior year. The increased expenses for both periods is primarily attributable to an increase in performance based marketing programs, start-up expenses related to the Coventry & Case custom cabinet line in the home center channel and increased staffing levels to support the Company's growth. General and administrative expenses increased $1.3 million for the second quarter and increased $876 thousand for 10 the six month period when comparing fiscal 2000 to fiscal 1999. The increase experienced in the second quarter of fiscal 2000 is associated with timing of performance based employee bonus compensation accruals, general and administrative expenses at Knapp Woodworking and increased reserves for bad debt. The fiscal year-to-date increase of $876 thousand for fiscal 2000 over fiscal 1999, reflects both the Company's recognition of expenses associated with its Knapp Woodworking subsidiary and increased reserves for bad debt, which were partially offset by a decrease in accruals for performance based employee bonus compensation. Liquidity and Capital Resources - ------------------------------- The Company's operating activities generated $4.5 million in net cash in the first six months of fiscal year 2000 compared to $6.9 million net cash generated in the same period of the prior fiscal year. Additional cash generated from a decrease in customer receivables was more than offset by increases in inventory and investments in promotional displays. Customer receivables decreased due to the timing of payments from certain accounts. Increased depreciation expense resulted from the Company's aggressive capital expenditure program over the past eighteen months. The increase in inventory levels resulted primarily from higher levels of work-in-process inventory required to support the Company's expanded product offering, overall growth and support for peak demand during the fall selling season. The period-over-period reduction in favorable cash flow from other accrued liabilities resulted primarily from changes in the timing of payments for promotional and tax related expense items. Capital spending during the first six months of fiscal year 2000 was $16.6 million, an increase of $5.5 million over the same period of the prior fiscal year. The Company is continuing to invest capital in additional capacity through a combination of new facility construction and plant expansions. During the first six months of fiscal year 2000 the Company invested in the initial construction of its new assembly and finishing facility located in Gas City, Indiana, expansion of finishing operations at its Moorefield, West Virginia facility, expansion of the drying and lumber processing capabilities of its lumber dimension facility located in Monticello, Kentucky, as well as general spending for machinery to increase capacity and efficiency. The Company anticipates that capital expenditures will continue at a rate equal to or greater than that of the first six months of the current fiscal year throughout the remainder of fiscal year 2000 as the Company continues to fund projects designed to increase capacity and improve the Company's competitive position. The Company intends to increase manufacturing capacity through both 11 the expansion of existing facilities and the construction of new facilities. Net cash provided by financing activities was $1.6 million for the first six months of fiscal year 2000 as proceeds from short- term borrowings offset payment of long-term debt and cash- dividends. In the same period of the prior fiscal year financing activities used $152 thousand in net cash. The Company began to borrow against the Company's short-term revolving credit facility during the second quarter of fiscal year 2000 as cash on-hand combined with cash generated by operating activities became insufficient to support payments to acquire plant, property and equipment. The revolving credit facility is used by the Company as a working capital account. As such, borrowings and repayments may routinely occur on a daily basis. During the second quarter of fiscal year 2000 the outstanding balance against this line of credit never exceeded $5.6 million. In this same period, the total transactions through this credit facility were borrowings of $30.4 million and payments of $28.5 million. The outstanding balance on this credit account was $1.9 million on October 31, 1999. Long-term debt to total equity declined from 14.6% at April 30, 1999 to 12.1% at October 31, 1999. Cash dividends of $397 thousand, or $0.05 per share, were paid during the second quarter of fiscal year 2000. Cash flow from operations combined with accumulated cash on hand and available borrowing capacity is expected to be sufficient to meet forecasted working capital requirements, service existing debt obligations and fund capital expenditures for the remainder of fiscal year 2000. Year 2000 - --------- The Company recognizes that the year 2000 presents many challenges for information systems, specifically the issue of two- digit determination of year. The Company has performed a self- assessment and has identified all known software and hardware issues associated with two-character versus four-character year codes. Business plans have been developed and initiated which have brought about four-digit year compliance for all internal software and hardware systems. The Company has completed 100% of the conversion of its critical systems including the order billing, accounts receivable, financial and manufacturing systems to a client-server based architecture that is Year 2000 compliant. The cost of updating systems to comply with four- digit dating is believed to have been incrementally immaterial as the Company's strategic business plan had already called for upgrading information systems technology. No significant additional expense beyond the standard information systems operating cost was incurred. The Company has no exposure 12 to contingencies related to the Year 2000 Issue for the products it has sold. The Company further recognizes a risk from the year 2000 impact on its suppliers and customers. In response, the Company has initiated formal communications with all of its significant suppliers, large customers and service providers to determine the extent to which the Company's interface systems are vulnerable to those third parties' failures to remediate their own year 2000 issues. The Company has contacted all of its critical vendors and all vendors with greater than $20,000 in activity over the last twelve months. Of this vendor group 59% have responded, including 100% of those suppliers deemed critical. Of the vendor respondents, all critical vendors have indicated that they were year 2000 compliant on or before July 31, 1999. Of the remaining population of surveyed vendors, 74% have responded that they would be year 2000 compliant on or before July 31, 1999. To date 80% of the Company's key customers have been identified as being year 2000 compliant, and the Company is working to further confirm year 2000 compliance among its customer base. To date, the Company is not aware of any external agent Year 2000 Issue that would materially impact the Company's results of operations, liquidity or capital resources. Further, based on presently available information, the Company does not believe that the incremental cost associated with the year 2000 compliance activities of third parties is material to the Company. There can be no guarantee that the systems of suppliers and customers will be converted by the end of calendar year 1999. In response, the Company is developing contingency plans to address critical system interfaces with these third parties in the event that these third parties are unable to resolve their year 2000 compliance issues by the end of calendar year 1999. At this point the Company has not quantified the impact of the most reasonably likely worst case scenario. The Company plans associated with the year 2000 modifications have been based on management's best estimates, which were derived utilizing numerous assumptions of future events including the continued availability of certain resources and other factors. The Company believes that it has completed all aspects of its year 2000 modification plan. However, there can be no guarantee of this, and actual results could differ materially from those plans. Specific factors that might cause such material differences include, but are not limited to, the availability and cost of personnel trained in this area, the ability to locate and correct all relevant computer codes, and similar uncertainties. 13 Other - ----- The Company's business has historically been subjected to seasonal influences, with higher sales typically realized in the second and fourth fiscal quarters. General economic forces and changes in the Company's customer mix have reduced seasonal fluctuations in the Company's performance over the past few years. The costs of the Company's products are subject to inflationary pressures and commodity price fluctuations. Inflationary pressure and commodity price increases have been relatively modest over the past five years, except for lumber prices which rose significantly during fiscal 1997. The Company has generally been able over time to recover the effects of inflation and commodity price fluctuations through sales price increases. The Company expects to maintain or increase recent profitability performance while investing resources in future products, facilities and markets. The Company expects that actions taken to exit certain lower margin, non-strategic businesses will position the Company to regain the efficiencies and cost structures achieved during both Fiscal 1998 and 1999. The Company currently has insufficient overall capacity to meet projected growth. As long as demand exceeds capacity and the Company continues to purchase outside material, gross margins will be negatively impacted by continued higher cost of goods sold. Capital spending is under way to correct this situation within the current fiscal year. Identified capital projects include expansion to remove specific capacity limitations in certain processes, productivity improvements, cost savings initiatives and replacement of aging equipment. The Company establishes debt to equity targets in order to maintain the financial health of the Company and is prepared to trim investment plans to maintain financial strength. While the Company is not currently aware of any events that would result in a material decline in earnings from fiscal 1999, we participate in an industry that is subject to rapidly changing conditions. The preceding forward looking statements are based on current expectations, but there are numerous factors that could cause the Company to experience a decline in sales and/or earnings. These include (1) overall industry demand at reduced levels, (2) economic weakness in a specific channel of distribution, especially the home center industry, (3) the loss of sales from specific customers due to their loss of market share, bankruptcy or switching to a competitor, (4) a sudden and significant rise in basic raw material costs, (5) the need to 14 respond to price or product initiatives launched by a competitor, (6) a significant investment which provides a substantial opportunity to increase long-term performance, (7) sales growth at a rate that outpaces the Company's ability to employ new capacity resulting in the requirement to outsource certain manufactured components and (8) disruption of business from the failure of a significant customer or supplier to attain year 2000 compliance. While the Company believes that these risks are manageable and will not adversely impact the long-term performance of the Company, these risks could, under certain circumstances, have a materially adverse impact on short-term operating results. The Company is involved in various suits and claims in the normal course of business. Included therein are claims against the Company pending before the Equal Employment Opportunity Commission. Although management believes that such claims are without merit and intends to vigorously contest them, the ultimate outcome of these matters cannot be determined at this time. In the opinion of management, after consultation with counsel, the ultimate liabilities and losses, if any, that may result from suits and claims involving the Company will not have any material adverse effect on the Company's operating results or financial position. The Company is voluntarily participating with a group of companies, which are cleaning up a waste facility site at the direction of a state environmental authority. The Company records liabilities for all probable and reasonably estimable loss contingencies on an undiscounted basis. For loss contingencies related to environmental matters, liabilities are based on the Company's proportional share of contamination of a site since management believes it "probable" that the other parties, which are financially solvent, will fulfill their proportional share of the contamination obligation of a site. There are no probable insurance or other indemnification receivables recorded. The Company has accrued for all known environmental remediation costs that are probable and can be reasonably estimated, and such amounts are not material. As reported in the Company's fiscal year 1999 Annual Report, the financial condition of Hechinger Co., the Company's third largest Home Center customer, had deteriorated significantly. And on September 9, 1999 Hechinger Co. announced that it would proceed with an orderly liquidation of its assets. The Company believes that the loss of Hechinger Co. will not have any material impact to the Company's performance as overall industry growth and the Company's continued increase in market share have been sufficient to offset lost sales from the reduction of business with 15 Hechinger Co. The Company did not have any material net asset exposure as of the date Hechinger Co. filed for bankruptcy protection nor did the Company have any material net asset exposure on the date Hechinger Co. announced its intent to proceed with an orderly liquidation of assets. On December 6, 1999 the Board of Director's approved a $0.05 per share cash dividend on its common stock. The cash dividend will be paid on January 7, 2000 to shareholders of record on December 22, 1999. Item 3. Quantitative and Qualitative Disclosure of Market Risk ------------------------------------------------------ The Company is exposed to changes in interest rates primarily from its long-term debt arrangements and, secondarily, its investments in securities. The Company uses interest rate swap agreements to manage exposure to interest rate changes on certain long-term borrowings. The Company's exposure to interest rate changes is not considered to be material. PART II. OTHER INFORMATION Item 6. Reports on Form 8-K ------------------- (a) Reports on Form 8-K The Company did not file any reports on Form 8-K during the three months ended October 31, 1999. 16 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN WOODMARK CORPORATION ----------------------------- (Registrant) /s/William A. Armstrong /s/Kent B. Guichard - ----------------------- ------------------- William A. Armstrong Kent B. Guichard Corporate Controller Senior Vice President, Finance and Chief Financial Officer Date: December 10, 1999 Date: December 10, 1999 Signing on behalf of the registrant and as principal financial officer 17 EX-27 2
5 1,000 6-MOS APR-30-2000 OCT-31-1999 3,567 0 39,658 2,944 23,642 68,978 119,313 52,113 150,869 46,306 10,550 0 0 22,104 64,762 150,869 193,436 193,436 141,854 141,854 0 274 152 14,311 5,597 8,714 0 0 0 8,714 1.10 1.08
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